Philips reports solid growth for Medical Systems in second quarter
4 August 2005
Philips recorded net income of €983
million (€0.78 per share), compared with
net income of €616 million (€0.48 per share) in the corresponding period of
2004. The €367 million increase in net income was entirely attributable to
the sale of NAVTEQ shares, which yielded a non-taxable gain of €753 million.
Solid growth at Medical Systems and Lighting was offset by declines at
Semiconductors and Mobile Display Systems (MDS). Sales amounted to €7,087
million, 3% lower than in Q2 2004. The weaker US dollar and dollar-related
currencies, as well as various divestments, had a downward effect of 2%. On
a comparable basis, sales decreased by 1%.
Income from operations amounted to €147 million, compared to €356 million
in the same period of 2004. Financial income and expenses resulted in an
expense of €57 million, compared with an expense of €65 million in Q2 2004.
Income taxes included a €109 million tax gain relating to a final agreement
on prior-years tax settlements.
Unconsolidated companies contributed €822 million to net income; this
included the gain on the sale of NAVTEQ shares. Results from unconsolidated
companies in Q2 2004 amounted to €430 million, including a net license gain
of €99 million related to InterTrust Technologies Corp. LG.Philips LCD's
contribution to net income was €10 million, compared to €251 million in Q2
Cash flow from operating activities was an inflow of €37 million,
compared to an inflow of €62 million in Q2 2004. Inventories as a percentage
of sales amounted to 13.3%, compared to 12.5% in Q2 2004.
Gerard Kleisterlee, Philips' President and CEO said: "We continue to make
steady progress in implementing our strategy by delivering on our management
agenda. The quarter showed growth in both the revenue and profitability of
our Medical Systems business; we also announced the first acquisition in
this important field. In a weak consumer retail environment, we are seeing
the benefits of our Business Renewal Program in Consumer Electronics.
Weakness in the technology sector, however, continued to hamper our